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Things were much more grim across the state of Michigan two and a half years ago when Business Leaders For Michigan was formed to try to turn around the state’s economy, using the influence of business leaders on state government.

Michigan has shown dramatic improvement of late, but there are still key changes necessary before it can reach the group’s goal: It wants Michigan to be among the top 10 states for growth in jobs, the economy and personal income, according to Doug Rothwell.

Rothwell, president and CEO of Business Leaders For Michigan, told a Grand Rapids audience last week that “the turnaround is underway. The data shows it.”

Rothwell, who gave the Huntington Breakfast Lecture at GVSU’s DeVos Center, added that the state now must leverage the assets it already has to create a new Michigan — and the business community in particular must play a key role in that step.

The first five steps in Business Leaders For Michigan’s Turnaround Plan focus mainly on things the state and local governments should or should not be doing.

Step one: Responsibly manage state finances. Rothwell said the Snyder administration has addressed the major issues raised in 2009 by his group, but some fixes are still in order, such as clear spending priorities and pricing the cost of all proposed legislation. Sound fiscal management practices have to be “memorialized” in legislation or policy.

Step two: Effectively and efficiently provide public services.

“We’ve got 3,000 units of local government in Michigan — 3,000 sets of rules” impacting local businesses, said Rothwell, noting that all that administration adds cost.

Another key issue at the state level is the cost of the Michigan corrections system. Rothwell said it costs five times as much to house a prisoner in Michigan for one year than one year of a college education. The state needs to at least reduce that cost to the average of the Great Lakes states, he said.

Step three: Create a competitive business climate. Elimination of the Michigan Business Tax was a major step forward, said Rothwell, but the state should benchmark the most successful attributes of the top 10 states in order to improve its business climate.

Step four: Strategically invest for future growth. Michigan will need 1 million more college graduates working here over the next 10 years, he said. Unfortunately, the state cut back funding for higher education by $1 billion over the last decade, as the state’s manufacturing economy tanked. The state’s infrastructure is also in dire need of increased funding in order to make it a “gateway hub” for the Midwest economy.

Step five: Accelerate the economic growth of cities and metro areas. The fiscal crisis facing the municipal government in Detroit is “a cloud that overhangs everything” in Michigan, said Rothwell.

The sixth step, which now needs the most attention, is not as dependent on a government role as the first five, said Rothwell. Step six is “leveraging the assets that we already have in Michigan today.”

According to Business Leaders For Michigan’s findings:

Michigan is still the world powerhouse in engineering talent. It needs to “brand” its engineering sector and encourage growth of engineering firms.

Michigan’s geographic location makes southeast Michigan the gateway to the Midwest. The proposed new bridge to Canada should be built, said Rothwell.

Michigan’s higher education system is a great asset, but Rothwell said Michigan schools should be more welcoming to students coming from out-of-state, although he noted that can be a political hot button. “We are 50 percent below the national average” for the proportion of out-of-state students enrolled in Michigan colleges and universities, he said.

The natural resources of the state have great potential for growth in food exports, and make it a great state for tourism.

The auto industry is still a huge asset for Michigan — especially in light of the unpredicted rapid recovery of the Michigan-based auto industry on a global scale.

Health and medical expertise in this state is growing and has been noteworthy since the first pharmaceutical companies were started here in the last century, noted Rothwell.

“None of this should be new to you,” said Rothwell, adding “there is a role for all of you to play” in making Michigan a top 10 state again.

The key step for all Michigan business executives is to stay in touch with their elected representatives in Lansing with Business Leaders For Michigan’s Michigan Turnaround Plan in hand, said Rothwell.

Pete Daly is a Grand Rapids Business Journal staff reporter who covers small business, banking and finance, food service and agriculture and government. Email Pete at pdaly at grbj dot com. Follow him on Twitter @PeteDalyGR

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